The Rajkot Commercial Co.-Operative Bank Ltd., RAJKOT-GUJARAT V. The Assistant Commissioner of Income Tax, Circle-2, RAJKOT-GUJARAT

ITA 15/RJT/2011

• Counselvise Citation: [2015] 120 COUNSELVISE.COM (IT) 9522 (ITAT-RAJKOT)
• Duration Of Justice: 4 year(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-02-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 17-02-2015
• Assessment Year: 2007-2008
• Appeal Filed On: 20-01-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: MJ RANPURA
• Keywords: Cost of acquisition; Capital expenditure

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBULAL, RAJKOT BENCH: RAJKOT .., ! ' #, $ % BEFORE SHRI N.S.SAINI, ACCOUNTANT MEMBER AND SHRI KUL BHARAT, JUDICIAL MEMBER &./ I.T.A. NO.15/RJT/2011 ( / ASSESSMENT YEAR : 2007-08) THE RAJKOT COMMERICAL CO- OPERATIVE BANK LTD. CHANDULAL BUCH MARG RAJKOT / VS. THE ASSTT.CIT CIRCLE-2 RAJKOT ( & ./ ) & ./ PAN/GIR NO. :AABAT 4359 D ( (* / APPELLANT ) .. ( +,(* / RESPONDENT ) (* - / APPELLANT BY : SHRI M.J. RANPURA, C.A. +,(* . - / RESPONDENT BY : SHRI AVINASH KUMAR, SR.DR ! / 0 . # / DATE OF HEARING 17/02/2015 12 . # / DATE OF PRONOUNCEMENT 18/02/2015 3 / O R D E R PER BENCH : THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST T HE ORDER OF THE LD.COMMISSIONER OF INCOME TAX(APPEALS)-III, RAJKOT (CIT(A) IN SHORT) DATED 15/11/2010 PERTAINING TO ASSESSMENT Y EAR (AY) 2007-08. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF AP PEAL:- 1.0 THE GROUNDS OF APPEAL MENTIONED HEREUNDER ARE WITHOUT PREJUDICE TO ONE ANOTHER. 2.0 THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS)-III, RAJKOT [CIT(A)] ERRED ON FACTS AS ALSO IN LAW IN CONFIRMING THE DISALLOWANCE OF LOSS OF RS.74,79,374/- AROSE ON AMORTIZATION OF PREMIUM PAID ON INVESTMENTS HELD TO MATURITY (HTM). THE ITA NO.15/RJT/2011 THE RAJKOT COMMERCIAL CO-OP.BANK LTD. VS. ACIT ASST.YEAR 2007-08 - 2 - DISALLOWANCE MADE IS TOTALLY UNJUSTIFIED ON FACTS AS ALSO IN LAW AND MAY KINDLY BE DELETED. 3.0 YOUR HONORS APPELLANT CRAVES LEAVE TO ADD, AMEND, ALTER, OR WITHDRAW ANY OR MORE GROUNDS OF APPEAL ON OR BEFORE THE HEARING OF APPEAL. 2. BRIEFLY STATED FACTS ARE THAT THE CASE O F THE ASSESSEE WAS PICKED UP FOR SCRUTINY ASSESSMENT AND THE ASSESSMENT U/S.143( 3) OF THE INCOME TAX ACT,1961 (HEREINAFTER REFERRED TO AS THE ACT) WAS FRAMED VIDE ORDER DATED 29/12/2009, THEREBY THE ASSESSING OFFICER (AO IN SHORT) MADE DISALLOWANCE OF AMORTIZATION AMOUNTING TO RS.74,79, 374/- AND COMPUTED THE INCOME AT RS.48,15,885/- AGAINST THE TOTAL LOSS OF RS.8,08,13,211/-. AGAINST THIS, THE ASSESSEE FILED AN APPEAL BEFORE T HE LD.CIT(A), WHO AFTER CONSIDERING THE SUBMISSIONS DISALLOWED THE APPEAL. THE ONLY ISSUE INVOLVED IN THE PRESENT APPEAL IS WITH REGARD TO CO NFIRMATION OF DISALLOWANCE OF LOSS OF RS.74,79,374/- ON ACCOUNT O F AMORTIZATION OF PREMIUM PAID ON INVESTMENTS HELD TO MATURITY. 3. THE LD.COUNSEL FOR THE ASSESSEE REITERATED T HE SUBMISSIONS MADE IN THE WRITTEN SYNOPSIS AND SUBMITTED THAT THE ISSUE I S SQUARELY COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF THE COORD INATE BENCH (ITAT RAJKOT BENCH, RAJKOT) RENDERED IN THE CASE OF RAJKO T DISTRICT CO- OPERATIVE BANK LTD. VS. ASSTT.CIT BEARING ITA NO.25 2/RJT/2011 FOR AY 2008-09, DATED 31/08/2012. HE SUBMITTED THAT THE D ECISION OF THE COORDINATE BENCH HAS BEEN AFFIRMED BY THE JURISDICT IONAL HIGH COURT RENDERED IN THE CASE OF CIT VS. RAJKOT DIST.CO-OP.B ANK LTD. REPORTED AT (2014) 43 TAXMAN.COM 161(GUJARAT). ITA NO.15/RJT/2011 THE RAJKOT COMMERCIAL CO-OP.BANK LTD. VS. ACIT ASST.YEAR 2007-08 - 3 - 3.1. ON THE CONTRARY, LD.SR.DR SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW. 4. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED THE MATERIAL AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW AS WELL AS THE JUDGEMENTS RELIED UPON BY THE LD.COU NSEL FOR THE ASSESSEE. THE LD.COUNSEL FOR THE ASSESSEE HAS FILED A WRITTEN SYNOPSIS. THE LD.COUNSEL FOR THE ASSESSEE RELIED ON THE DECISION OF CO-ORDINATE BENCH RENDERED IN THE CASE OF RAJKOT DISTRICT CO-OP.BANK LTD. VS. ACIT (ITA NO.252/RJT/2011 FOR AY 2008-09). THE HONBLE TRIBU NAL IN PARAS-6, 7 AND 8 OF ITS ORDER HAS OBSERVED AS UNDER:- 6. WE HAVE HEARD BOTH THE PARTIES AND CAREFULLY C ONSIDERED THEIR SUBMISSIONS. THE ASSESSEE SOUGHT AMORTIZATION OF S ECURITIES PREMIUM IN RESPECT OF INVESTMENT HELD UNDER HTM CAT EGORY, WHICH WORKED OUT TO RS.40,30,000/-. THE AO HAS DISALLOW ED THE CLAIM OF THE ASSESSEE ON THE GROUND THAT THE SAID LOSS CLAIM ED BY THE ASSESSEE WAS HYPOTHETICAL IN THE YEAR UNDER APPEAL AND THAT LOSS IF ANY WOULD BE ELIGIBLE FOR CONSIDERATION AT THE TIME OF TRANSFER OF SECURITIES. ACCORDING TO HIM, THE ELEMENT OF LOSS OR PROFIT COULD BE DETERMINED ONLY ON SALE/TRANSFER OF SECURITIES. ON APPEAL, THE LD.CIT(A) HAS HELD THAT THE INVESTMENT HELD BY THE ASSESSEE IN HTM CATEGORY WERE NOT CAPABLE OF DETERMINATION AND THER EFORE THE LOSS IF ANY COULD BE CONSIDERED IN THE YEAR OF SALE AND NOT IN THE YEAR UNDER APPEAL. 7. THE LD.AR FOR THE ASSESSEE CLAIMS THAT SIMILAR ISSUE HAS BEEN CONSIDERED AND ALLOWED BY THIS TRIBUNAL IN FAVOUR O F THE ASSESSEE IN DCIT V. BANK OF RAJASTHAN LTD.(SUPRA). A COPY O F THE SAID ORDER HAS BEEN PLACED BEFORE US IN WHICH THIS TRIBU NAL HAS HELD AS UNDER:- ITA NO.15/RJT/2011 THE RAJKOT COMMERCIAL CO-OP.BANK LTD. VS. ACIT ASST.YEAR 2007-08 - 4 - 8. IN GROUND NO.3, THE REVENUE HAS CHALLENGED THE ACTION OF THE LEARNED CIT(APPEALS) IN DELETING THE ADDITION OF RS.11,77,23,000/- MADE BY THE AO BY WAY OF DISALLOWANCE OF DEDUCTION CLAIMED BY THE ASSESSEE ON ACCOUNT OF AMORTIZATION OF PREMIUM PAID FOR SECURITIES HELD UNDER HELD TO MATURITY (HTM) CATEGORY. 9. THE AMORTIZED AMOUNT OF PREMIUM PAID FOR SECURITIES HELD UNDER HTM CATEGORY AMOUNTING TO RS.11.77 CRORES WAS CLAIMED BY THE ASSESSEE AS DEDUCTION IN ITS COMPUTATION OF TOTAL INCOME. THE SAME, HOWEVER, WAS DISALLOWED BY THE AO HOLDING THAT THE EXPENDITURE INCURRED ON PREMIUM PAID FOR SECURITI3ES HELD UNDER HTM CATEGORY WAS A CAPITAL EXPENDITURE NOT ALLOWABLE S DEDUCTION. HE HELD THAT THE SAID SECURITIES WERE IN THE NATURE OF INVESTMENT AND NOT STOCK IN TRADE. ON APPEAL, THE LEARNED CIT(APPEALS) DELETED THE DISALLOWANCE MADE BY THE AO ON THIS ISSUE. BESIDES RELYING ON HIS OWN ORDER IN ASSESSEES OWN CASE ON A SIMILAR ISSUE FOR THE EARLIER YEAR, THE LEARNED CIT(APPEALS) ALSO RELIED ON CBDT INSTRUCTION NO.17/2008 DATED 26-11-2008 PUBLISHED IN 220 CTR (STATUE) PAGE 41. HE HELD THAT THE ASSESSEE COMPANY WAS ABOUND TO CLASSIFY ITS INVESTMENT AS PER RBI GUIDELINES DATED 16-10-2010 AND AS PER THE SAID GUIDELINES, INVESTMENT CLASSIFIED UNDER HTM CATEGORY WAS REQUIRED TO BE CARRIED AT ACQUISITION COST UNLESS IT WAS MORE THAN THE FACE VALUE. HE HELD THAT THE PREMIUM ON SUCH INVESTMENTS WAS ALSO REQUIRED TO BE AMORTIZED OVER THE PERIOD REMAINING TO MATURITY. HE HELD THAT THE CLAIM OF THE ASSESSEE THUS WAS AS PER RBI GUIDELINES AND CBDT INSTRUCTION WHICH CLARIFIED THAT PREMIUM AMORTIZED OVER THE PERIOD REMAINING TO MATURITY WAS LIABLE TO BE ALLOWED AS DEDUCTION. 10. AT THE TIME OF HEARING BEFORE US, THE LEARNED REPRESENTATIVES OF BOTH THE SIDES HAVE AGREED THAT THIS ISSUE IS ALSO SQUARELY COVERED IN FAVOUR OF THE ASSESSEE BY THE VARIOUS ORDERS OF THE TRIBUNAL PASSED IN ASSESSEES OWN CASE FOR EARLIER YEARS. COPIES OF THE SAID ORDERS ARE PLACED ON RECORD BEFORE US AND A PERUSAL OF THE SAME SHOWS THAT IN ONE OF SUCH ORDERS DATED 22 ND DEC., 2010 PASSED IN ASSESSEES OWN CASE FOR ASSESSMENT YEARS 2002- 03 TO 2006-07, THE COORDINATE BENCH OF THIS TRIBUNAL HAS DIRECTED THE AO TO ALLOW THE PREMIUM AMORTIZED BY THE ASSESSEE OVER THE PERIOD REMAINING TO MATURITY HOLDING THAT THE SAME WAS CLAIMED ITA NO.15/RJT/2011 THE RAJKOT COMMERCIAL CO-OP.BANK LTD. VS. ACIT ASST.YEAR 2007-08 - 5 - AS PER THE RELEVANT RBI GUIDELINES AND EVEN THE CBDT HAS ISSUED INSTRUCTIONS TO ALLOW THE SAME. RESPECTFULLY FOLLOWING THE SAID ORDER OF THE TRIBUNAL IN ASSESSEES OWN CASE FOR EARLIER YEARS, WE UPHOLD THE IMPUGNED ORDER OF THE LEARNED CIT(APPEALS) GIVING RELIEF TO THE ASSESSEE ON THIS ISSUE AND DISMISS GROUND NO.3 OF THE REVENUES APPEAL. 8. IT IS EVIDENT FROM THE ABOVE THAT THE ISSUE UND ER APPEAL IS COVERED IN FAVOUR OF THE ASSESSEE BY THE AFORESAID DECISION OF THIS TRIBUNAL. RESPECTFULLY FOLLOWING THE SAID DECISION , THE IMPUGNED ADDITION MADE BY THE AO AND CONFIRMED BY THE CIT(A) IS DELETED. APPEAL FILED BY THE ASSESSEE IS ALLOWED. 4.1. WE FIND THAT IN THE INSTANT CASE, THE FACTS AR E IDENTICAL TO THE FACTS OF THE JUDGEMENT OF HONBLE JURISDICTIONAL HIGH COU RT RENDERED IN THE CASE OF CIT VS. RAJKOT DIST.CO-OP.BANK LTD. REPORTE D AT (2014) 43 TAXMANN.COM 161(GUJARAT). THE REVENUE COULD NOT PL ACE ON RECORD ANY CONTRARY JUDGEMENT OF HONBLE APEX COURT. THEREFORE , FOLLOWING THE RATIO LAID DOWN IN THE JUDGEMENT OF HONBLE GUJARAT HIGH COURT RENDERED IN THE CASE OF CIT VS. RAJKOT DIST.CO-OP.BANK LTD.( SUPRA), WE HEREBY DIRECT THE AO TO DELETE THE ADDITION OF RS.74,79,37 4/- AS CONFIRMED BY THE LD.CIT(A). THUS, GROUND RAISED IN THE ASSESSEES A PPEAL IS ALLOWED. 5. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. ORDER PRONOUNCED IN THE COURT ON WEDNESDAY, THE 18 TH DAY OF FEBRUARY, 2015 AT RAJKOT. SD/- SD/- ( .. ) ( ! ' #) $ ( N.S. SAINI ) ( KUL BHARAT ) ACCOUNTANT MEMBER JUDICIAL MEMBER RAJKOT; DATED 18/ 02 /2015 .. , /.$../ T.C. NAIR, SR. PS ITA NO.15/RJT/2011 THE RAJKOT COMMERCIAL CO-OP.BANK LTD. VS. ACIT ASST.YEAR 2007-08 - 6 - / COPY OF THE ORDER FORWARDED TO : 1. (* / THE APPELLANT 2. +,(* / THE RESPONDENT. 3. &6& # ! 7# / CONCERNED CIT 4. ! 7# ( ) / THE CIT(A)-III, RAJKOT 5. 9/' : +$#$ , , /DR,ITAT, RAJKOT 6. : EF G 0 / GUARD FILE. / BY ORDER, , 9# +$# //TRUE COPY// !/ '# $% ( DY./ASSTT.REGISTRAR) # %&# ' , / ITAT, RAJKOT 1. DATE OF DICTATION ..17.2.15 (DICTATION-PAD 6-PA GES ATTACHED AT THE END OF THIS FILE) 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 17.2.15 3. OTHER MEMBER 4. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.P. S./P.S.. 5. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 6. DATE ON WHICH THE FAIR ORDER COMES BAC K TO THE SR.P.S./P.S.18.2.15 7. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 18.2.15 8. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK.. . 9. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER.. 10. DATE OF DESPATCH OF THE ORDER